One of our goals before we retire is have the mortgage paid off. We originally got a 30 year fixed rate loan a few years ago when the townhouse was built.
When we started our regular monthly payments we sent in an extra payment towards the principal. The goal had been to get our home equity built up as quickly as possible. I thought it would be nice to do a quick review to see how far we came in the last 3 years.
Housing prices are fairly steady now after the drop from last year. For now I’m calculating equity based on the purchase price (which is fairly close to its recent sales in the neighborhood) minus the current balance.
- Original Mortgage: $123,239
- Current Balance: $102,683
That means right now our equity is about $20,556. Not bad, but we’re hoping to get this lowered so we can have 20% equity and hopefully get that mortgage insurance premium knocked off.
Saving Money and Time By Paying The Mortgage Off Early
Paying extra has also given us a few other benefits, including saving tens of thousands of dollars in interest saved with the accelerated schedule. Following the mortgage amoritization schedule, most of the money goes towards paying interest in the beginning of your loan.
As the mortgages draw to a close, the payments increasingly goes towards the principle owed. Extra payments gets us past the earlier portion of the mortgage and more of that money is applied to the principal.
Paying down the mortgage quickly is also about our own peace of mind. We also don’t want to limit our cash flow for the full 30 years by carrying our mortgage the full length.
Building Home Equity
How are you doing with your home equity? What kind of mortgage did you get and why? How much equity to you have right now? Do you plan on paying off your mortgage early?
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